Energy storage in California: prose and cons

Spirited give-and-take over CEC report

Phil Carson | Nov 29, 2011

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Today we'll address bona fide issues—and, perhaps, a few misunderstandings—over energy storage in California. I've constructed the following column to stand alone, if you want a quick read. But I link to the primary documents in question, should the details interest you.

On Nov. 16 I wrote a column, "Energy Storage, EVs and Collaboration," which began with a brief word on a California Energy Commission (CEC) workshop held the day before in Sacramento.

In part, the workshop presented a report—"2020 Strategic Analysis of Energy Storage in California"—issued by the CEC's Public Interest Energy Research (PIER) program, authored by Ethan Elkind, University of California (UC), Berkeley School of Law, Andris Abele, UC Los Angeles and Byron Washom, UC San Diego, based on research by many parties including prime contractor, the California Institute for Energy and Environment.

In my view, the report did an admirable job of reviewing existing storage technologies and their status, looked at the regulatory and policy framework governing storage, examined technology gaps, research needs and policy challenges, reviewed applications and use cases in California. It also described a vision for storage's potential place on the grid and made some recommendations. Its final section stated, presciently, that "few subjects are as far-reaching and volatile as the future of energy storage."

In my column, I said that any report that listed scores of "advisors" up front could not be a consensus document. Rather, it should include dissenting views. That was a bit simplistic as the report did not imply consensus nor require its corollary, dissent. Perhaps a more nuanced notion would be for commentary aimed at the CEC and the policy issues before that policy-making body.

In any case, a faithful Intelligent Utility Daily reader, consulting engineer Jack Ellis, who has been active in the public process in California energy policy, had already written a contrasting view and shared an abridged version with me. We ran that as an op-ed piece, "Energy Storage: Not So Fast," under our "Industry Expert" banner. (In fairness, that polemical title was mine.)

Ellis' thesis statement read: "While I agree that storage could be an attractive resource as California pursues the 33 percent renewable portfolio standard (RPS) target, in my view the report is biased toward advocacy and does not give enough weight to several other critical factors."

Ellis' brief opinion piece discussed storage's cost-effectiveness vis-à-vis alternatives, the vagaries of storage's role in time-shifting energy in a complex electricity market, possible unintended consequences relative to electric vehicle adoption and storage's potential emissions-related impacts.

"Storage has a place in modern electric grids, but only in the right applications and at the right price point," Ellis concluded, adding the suggestion that the report had promoted storage and placed "the economic burden of market transformation ... solely on California electricity consumers."

Lots of assumptions there, a few based on misperceptions or misreading, according to the report's principle author, Ethan Elkind, UC Berkeley School of Law. Elkind's response was forwarded to me; I provide here an edited version.

"Ellis' comments provide an inaccurate description of our report and its aims," Elkind wrote. "The report seeks to offer policy-makers an assessment of how the state could deploy energy storage technologies by 2020 in a cost-effective manner, given California's environmental and renewable energy goals.

"The report did not endorse specific policies or technologies. Instead, it assesses the current state of energy storage technologies, in terms of costs, commercial readiness and need for technical advances. It also discusses the full range of policy options available to the state's decision-makers that affect energy storage, while acknowledging differing viewpoints, competing values and possible trade-offs. In summary, the report is an informational document for policy makers as they assess grid needs over the next decade and how various energy storage technologies may address them.

"[Moreover], the report discusses cost-effectiveness in a number of contexts ... [offering] a detailed assessment of ... storage technologies [and] the need for additional demonstration projects and technical research. [These] technologies are diverse and cannot be characterized as broadly as Ellis implies.

"The report includes up-to-date cost figures for various technologies to provide a current snapshot figure. However, the report's purpose is to project a future for these technologies a decade from now.  As such, the critical factor for policy makers is the likely cost of these technologies in 2020 and beyond and what technical and policy options exist to make an optimal future reality. 

"The report also does not take a position on specific policy actions, as Ellis' comments imply.  Instead, it describes the range of policy mechanisms available to policy makers, some of which include possible targets for utility procurement and some that involve regulatory and market reform that do not entail costs to ratepayers.

"Ellis also includes a number of specific critiques about the report ... Most importantly, [in his lengthier remarks to the CEC] he misquotes a statement in the report regarding optimal deployment by 2020, claiming that we conclude that California will need 3,000 to 4,000 megawatts of energy storage by 2020. In fact, our report states:

"'While policy makers should explore all cost-effective options, given the state's environmental and greenhouse gas goals and need to avoid curtailment of renewable resources, studies indicate that California may require between 3,000 to 4,000 megawatts of fast-acting energy storage by 2020 to integrate the projected increase in renewable energy.'
 
"Ellis omitted the critical words 'may require' when he reprinted our statement. He also omitted the preceding clause describing the need to avoid curtailment and additional greenhouse gas emissions as the state integrates more renewable energy over the coming decade and beyond. These omissions result in a mischaracterization of the statement and its role in providing policy makers with a sense of the range of optimal deployment by 2020.
 
"This report would have failed ... its mission had we chosen to omit discussion of the promise of energy storage and certain policy options, simply because we pre-judged them to be ineffective or too costly, [resulting] in precisely the bias and advocacy that Ellis alleges: California's policy-makers and citizens deserve to have all the options and potential scenarios described to them in order to make as informed decisions as possible."

A minor dust-up, perhaps, but one that provides greater insight into the storage issue. When one is asked to provide options and is alleged to have advocated, that's worthy of clearing up. More to the point, the "holy grail" of the power industry lives in a web of technological, economic and political threads that are not static, making it a moving target that's hard to assess, let alone agree upon. A trite adieu, perhaps, but better than "time will tell" (because it won't).

A few other recent discussions for your consideration include "Energy Storage Debate Rages in Our Pages" and "Energy Storage Policy Evolving in California."

Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757

 

 

 

 

 

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Comments

A Partial rebuttal

I stand by my comments.  However I think it's worth singling out a couple of the points Mr. Elkins makes above for some more discussion. 

First, there is no support for a statement that either the grid "may need" or "will need" 3,000-4,000 MW of storage at any point in time.  The KEMA report suggests these amounts of storage were shown to improve performance in some of KEMA's simulations, but that's not the same as concluding storage might be needed or will be needed.  Moreover, the workshop's presentation materials include these words, "Studies indicate 3,000-4,000 MW needed for 33% renewable portfolio standard".  Short of using the words "must have", that's a pretty strong statement.

Second, I don't dispute the report's objective, which was to provide policymakers with options, however after reading two drafts and examining the presentation materials, I believe there was too much emphasis on how to accelerate mass deployment and too little emphasis on the very tangible practical problems that have to be overcome - including technology costs - and a more thorough discussion of some of the economic and emissions issues I raised.  

To put this in some perspective, one of the most commonly cited uses for storage is "renewable integration".  Yesterday I learned second-hand that a lithium ion battery system for providing regulation, which is currently the ancillary service that fetches the highest price in any organized market, requires $800/MW/day in revenues to be economically viable.  That's $290,000/MW/year.  Today the annual revenue for providing regulation service in California is about $50,000/MW/year, and there are 22,000 MW of capacity certified to provide the service when the maximum expected demand for regulationin 2020 is around 1200 MW.

Policymakers need more than one perspective, so they can now read both Mr. Elkind's report and my comments, and then they can decide for themselves.  There's a growing concern about the cost and rate impacts of California's renewable energy goals, and I've heard rumblings the CPUC no longer has a large appetite for market transformation measures that have high costs and uncertain benefits.  In my comments, I proposed an alternative that would fund a modest amount of additional research aimed at technology and cost improvements.  I think those are worthwhile goals and I hope the CEC, the CPUC and the California legislature will consider and adopt my recommendation.

Jack Ellis, Tahoe City, CA